Buffett bets on truck stops, to buy majority of Pilot Flying J

(Reuters) - Warren Buffett’s Berkshire Hathaway Inc bought a major stake in Pilot Flying J, the largest U.S. truck stop operator, and said it will become the majority owner in six years, deepening its commitment to the American economy.

Pilot Flying J has more than 750 locations in 44 U.S. states and Canada selling gas, diesel fuel, and convenience goods, and offering trucks more than 70,000 parking spaces and 5,000 diesel lanes.

While terms for Tuesday’s transaction were not disclosed, Pilot Flying J is 15th-largest private company in the United States, with annual sales of $19.6 billion, Forbes magazine said. The family-run company employs more than 27,000 people.

Berkshire bought 38.6 percent of Pilot Flying J from several investors and plans to boost ownership to 80 percent in 2023.

The controlling Haslam family retained a 50.1-percent stake, and will own the remaining 20 percent once Buffett takes over.

Pilot Flying J has faced scrutiny in recent years over whether employees withheld diesel fuel rebates from customers, and in 2014 paid a $92 million fine to settle a U.S. criminal probe. Several executives were later criminally charged.

As he normally does when buying family-run companies, Buffett will leave Pilot Flying J’s management in place.

The Knoxville, Tennessee-based company is led by billionaire Jimmy Haslam, who also owns the Cleveland Browns football team and whose brother Bill is Tennessee’s governor.

Jim Haslam, Jimmy’s father, founded what became Pilot Flying J in 1958, with a single gas station. The company’s formal name is Pilot Travel Centers LLC.

“Jimmy Haslam and his team have created an industry leader and a key enabler of the nation’s economy,” Buffett said in a statement. “The company has a smart growth strategy in place and we look forward to a partnership that supports the trucking industry for years to come.”

Shares of TravelCenters of America, a Pilot Flying J rival, rose as much as 15.7 percent on Tuesday.

Marmon and IMC were also family-controlled businesses that Berkshire bought in stages.

“He truly wants us to run the company, wants us to maintain the culture,” Haslam said about Buffett. “It’s just a marriage that we thought made a lot of sense.”

Berkshire owns more than 90 businesses including Geico insurance, Dairy Queen ice cream, and several utilities, and has big investments in such companies as Apple Inc, Bank of America Corp and Wells Fargo & Co.